Breakout: This Auto Stock is Up 16% in 5 Days to All-Time High!

  • Stock Market Analysis
  • Editors Pick

While many stocks have gained ground in the last few session as the broader markets became a bit stable some stocks have gone through the roof to deliver astounding returns to their shareholders. 

The Auto space has been one of the best performers in the last few weeks and has been providing investors with some cover to hide behind during market crashes. However, one stock that has been making noise since the last few sessions is Jamna Auto Industries Ltd (NS: JMNA ) which is in the business of providing automotive suspensions for commercial vehicles.

The small-cap company has a market capitalization of INR 4,978 crores and has delivered a lucrative return of 51.45% in the last one year. It is one of the decently valued auto stocks compared to other players in the industry and trades at a P/E of 35.36, compared to the industry’s average P/E of 115.77. Peers such as Samvardhan Motherson International Limited, Schaeffler India Limited and Sona BLW Precision Forgings Limited trade at a P/E of 60.85, 56.13 and 91.75, respectively.

Image Description: Weekly chart of Jamna Auto showing a consolidation phase

Image Source: Investing.com

Coming to the chart, the stock has been rallying for the last few sessions as investors flee to buy Jamna Auto shares. In the last 5 trading sessions, the share price of Jamna Auto is up by a decent 16% with all 5 sessions closing in the green.

In the due course of the rally, shares of Jamna Auto also gave a healthy breakout on the chart from a broad consolidation pattern. Since November last year, the stock had been trading in a range of ~INR 124 on the upside (resistance) and ~INR 95 on the downside (support). However, today, this 8-month-long consolidation phase seems to have ended with a massive breakout.  

The breakout above the resistance has been followed by a noticeable spike in the volume figures. In fact, the stock had been clocking a higher volume as it was progressing towards the breakout levels. On the breakout day, the volume exceeded the 10.65 million mark, which is the highest one-day volume since August last year. 

The confluence of a range breakout on a healthy volume followed by an all-time high closing is a good recipe for a rally. As per technical analysis, the estimated target for the rally comes out to be around INR 150 - INR 153. However, as it was a breakout from a long consolidation phase, the targets could take time to be met. If the stock falls back below the support of INR 124 (earlier resistance) then investors should get cautious and become skeptical about the credibility of the impending up move.

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  • Pankaj Vashistha @Pankaj Vashistha
    ITC has reached hit Rs 284, which was the target of recent breakout. No new entry should be taken. As it will go down in corrective wave.
    Like 0
  • Nijwm Daimary @Nijwm Daimary
    why ITC ic giving brkout ?
    Like 2
  • Nijwm Daimary @Nijwm Daimary
    why ITC ic giving brkout ?
    Like 0
  • Nijwm Daimary @Nijwm Daimary
    why ITC ic giving brkout ?
    Like 0
  • Pankaj Vashistha @Pankaj Vashistha
    If one notice bearish candle tomorrow or next week, then i would strongly recommend to investors to sell this stock, else they will witness shock of their life in terms of huge loss. Mark my words and remember me after few months.
    Like 0
  • Pulkit Gupta @Pulkit Gupta
    Why itc is giving brkout ?
    Like 0

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